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Restaurant Operators Advance Health Care Reform Plan

Cost tops list of industry players' concerns.

October 24, 2010, 08:00 pm

NEW YORK -- Restaurateurs, attorneys and other concerned parties met in n New York and Los Angeles last week to consider steps that may be taken to adapt the Patient Protection and Affordable Care Act, according to a report by Nation’s Restaurant News.

Restaurant industry players are concerned the health care law’s enactment will cut sharply into earnings and potentially force operators to raise menu prices, eliminate jobs and slow growth, the magazine reported. Some operators believe political pressure will result in changes.

“I believe the administration will be willing to negotiate around the edges of that bill,” said Julia Stewart, chairman and chief executive of DineEquity Inc. Stewart spoke at the Break Bread conference in Los Angeles, an event organized by law firm Davis Wright Tremaine LLP, accounting firm J.H. Cohn LLP and executive search firm The Elliot Group. Stewart encouraged restaurateurs to contact their representatives, state association, National Restaurant Association or National Council of Chain Restaurants to share the impact this legislation could have on business.

Laurence Kretchmer, a partner with celebrity chef Bobby Flay in six fine-dining restaurants and five fast-casual Bobby’s Burger Palace locations, told attendees that his company’s health care expenses would increase about 29 percent under the new legislation if they kept the same coverage.

The company is planning to shift to a bare-bones plan, Kretchmer said, adding, “It doesn’t make me want to grow my business, I’ll tell you that much.”

For plan years beginning on or after Sept. 23, 2010, mandates include the elimination of lifetime dollar limits on essential benefits, coverage of dependent children up to the age of 26, restricted annual limits on essential benefits until 2014 and the elimination of pre-existing condition limitations for enrollees under 19, according to the report.

As of Jan. 1, 2011, prescriptions for over-the-counter drugs and medicine in tax-favored accounts will be required. While the government initially planned to implement W-2 reporting requirements beginning in January, the IRS said that will not be mandatory next year.

In 2011, the Community Living Assistance Services and Support Act also takes effect. CLASS enables employees to have an average of $150 or $240 per month, based on salary and age, automatically deducted from paychecks to help save for long-term care.

In 2012, the law will require uniform communications standards for employers and a 60-day advance notice of material changes. In 2013, Medicare taxes will rise on earnings above $200,000 for individuals and $250,000 for married couples. In addition, contributions to flexible savings accounts will be limited to $2,500 per year, indexed by the Consumer Price Index in following year, the magazine reported.

In 2014, states will be responsible for establishing exchanges that will create a marketplace for the purchase of health care insurance. Individuals will be required to have health coverage or pay a penalty. All businesses with more than 50 full-time-equivalent workers will be required to offer coverage or pay a $2,000-per-person penalty for the first 30 employees. Insurance will be available to employees following a waiting period of 90 days. The mandates include new reporting requirements for businesses with more than 50 employees, according to Nation’s Restaurant News.

In 2018 “Cadillac” or high-cost employer-provided health plans beyond $10,200 for single coverage and $27,500 for families will be taxed.

At a live symposium and webinar held by consulting firm J.H. Cohn in New York, Kevin Quinn, a partner with Cohn Benefits Consultants told participants that Yum! Brands Inc. had projected the new law could cost its franchisees more than $30 million.

Several participants said they expect many operators to opt for the $2,000 per-employee penalty rather than offer benefits to their employees, the magazine reported.